Toronto

The Bank of Canada left the overnight rate at 1.00% at its meeting yesterday, as was universally expected. This is great news for anyone with a variable rate mortgage, or any product tied to prime like a line of credit or student loan.

More notable was the Bank’s assessment of the global outlook, which was deemed as having deteriorated relative to April. The weakening in the global environment was cited as a factor restraining growth in Canada; however, the Bank views the domestic economy as continuing to grow at a moderate pace. These factors resulted in the Bank downgrading its 2012 growth forecast to 2.1% from 2.4%. The Bank forecasted that the economy will grow at a faster 2.3% in 2013 (albeit a tad slower than April’s 2.4% forecast) and 2.5% in 2014 (higher than April’s forecast of 2.2%).

The tone indicated that there may be need to reduce stimulus in order for the Bank of Canada to maintain the 2% target rate for inflation, but most economists don’t expect that to happen till 2013. More great news for variable rate mortgages, and anyone with debt tied to prime. Yields are trending down so there may be some room for some short term decreases to fixed rates. Sit tight and we’ll see!

Much of this is due to the slowing economic growth in Canada, the U.S. and China, and the unrelenting economic problems in Europe. These helped to handcuff our central bank. It has been looking to raise rates in an effort to slowdown the growth of household debt in Canada. But the Bank of Canada did get some relief with Ottawa’s imposition of new lending rules for high-ratio mortgages and new mortgage qualification limits. The regulatory moves amount to a de facto interest rate increase in the housing sector and, anecdotally at least, appear to be having the desired, cooling effect.

BEST RATES1 Yr – 2.39%

3 Yr. – 2.69%

5 Yr. – 2.94%

VRM – 2.79%

Lee Welbanks is a Mortgage Broker with Welbanks Financial Group, Lee will be posting these informative “Market Minutes” each week for you to enjoy. Please remember to the Spring Realty Insider Club list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments right to your inbox. Find us on Facebook and Twitter too!

Bond yields have risen fairly significantly over the last two weeks, giving some pressure to current mortgage rates and more notably, our 2.99% specials. Bank of Nova Scotia withdrew their 2.99% promotion this week and I wouldn’t be surprised to see more lenders do so.

There has also been more discussion this week about upcoming mortgage changes that the government may announce along with the upcoming budget on March 29th. There have been a whole range of recommendations from both the private sector (TD Chief Economist Don Drummond) and OSFI (Office of the Superintendent of Financial Institutions) that include:

Increasing minimum down payment from 5% to 7%

Reducing the maximum amortization to 25 years

Cash back should not be considered part of down payment (eliminates 100% financing)

CMHC premiums to be included in ratios

Increasing CMHC premiums

Reducing the amount of “exceptions” made to approve deals

This isn’t an exhaustive list but highlights some of the ideas on the table. Once Mark Carney announces his budget in a week’s time, we’re likely to see the final product of the discussions that have been taking place between the government and the country’s top economists.

Inflation numbers will also be released this Friday which may influence the final version of the mortgage changes that we see.

Lee Welbanks is a Mortgage Broker with The Mortgage Centre and trusted Spring Realty mortgage expert. To learn more about your funding options please Contact Lee today. Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments.

There was a lot of talk this past week about the potential for legislated mortgage changes this year. The government has publicly shared their concern over a heated real estate market and record debt-to-income levels. Changing interest rates effects the whole economy so the only other alternative is to change policy to affect homeowners.

This kind of interference is exactly what industry insiders would like to avoid as they feel the markets are fine as they are and there are no signs of a housing bubble. Further intervention would mark the fourth time since 2008 that the government has stepped in to affect the housing market without changing rates.

Most experts are predicting the following as possible options to help slowdown our “hot” housing market:

1. Increase the minimum down payment from 5% to 10%

2. Reducing the maximum amortization for CMHC insured mortgage to 25 years

3. Increasing CMHC premiums

Most experts expect some combination of these changes to happen before the spring market goes into high gear, and before the next federal budget, which is expected at the end of March.

With this news capturing most of the lending headlines this past week, there was little else that has affected rates. They have stayed the course while pundits watch for next week’s Bank of Canada interest rate announcement and employment numbers as a gauge for future rate direction.

Lee Welbanks is a Mortgage Broker with The Mortgage Centre and trusted Spring Realty mortgage expert. To learn more about your funding options please Contact Lee today. Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments.

Steps from Spadina, Fabrik condos is coming soon to the Fashion District. This boutique style condo will feature attractive modern architecture along with a huge variety of floor plans, top notch amenities, a great neighbourhood, and excellent access to TTC.

Most definitely one of Toronto’s most recognizable landmarks. The Flatiron Building has been sitting on this site since 1892. Designed and built by architect David Roberts Jr. for The Gooderham and Worts Company to be used as their head office.

Not only does this building stand as an example of fine late 19th century architecture but is also an ode to the late Paul Oberman; former CEO of Woodcliffe properties and a man who loved the City of Toronto. It is because of his love for this City and passion for our history that this building stands tall and proud today.

Nestled in Toronto’s St. Lawrence community the location couldn’t be more perfect. Update: The Flatiron Building sold in 2011 for 15.29 million dollars.

Have you been using mls.ca to search for properties? Stop the insanity!!! It’s time to check out the Spring Realty custom Home Finder. You’ll have to quickly register (don’t worry, we don’t spam!) and once you do you’ll have access to a direct data feed from the Toronto Real Estate Board. We can now provide you with more up-to-date listing info than the traditional MLS system as well as other vital information not listed anywhere else. We have neighbourhood info, school, and transit info too.

VVVVIP Access Alert: Oct 20th Spring Realty will have priority access to the floorplans and prices. Please contact us for front of the line access to the hottest project Leslieville has seen since the launch of Worklofts and Flatiron. Include you phone #, email address and price range. We will contact you the moment we have details re: next steps. To learn more about the South Riverdale Community visit our Neighbourhood Page here.

Leslieville was buzzing with excitement back in March 2011 when Streetcar Developments put up their sign on their newly acquired 345 Carlaw Ave. They purchased this building as well as the white ones to the North and East for just over $12 Million at the end of 2010. It was such a refreshing sight as we were all so disappointed with the release of Showcase Living Lofts in the empty lot at Colgate and Carlaw. We won’t get in to how terrible Showcase is or how it belongs somewhere in the 905 and how I will never set foot in to that sales centre again. That’s a story for another post. I’ll outline some points below about the development, oh, it’s going to be called “The Carlaw Lofts” with the tag line “your stage”. Very nice, very very nice!

12 Story glass and aluminum structure (similar to the Flatiron across the street) on the NW corner of Dundas and Carlaw

Stacked Townhomes to the East (about 3 stories high) main level will be live/work

Maintaining part of the original building!

The ground level of the main building will feature a glass enclosed public event space for farmers markets, art shows, music events. Will be available for all sorts of events. Sort of a way to give back to the community (as every building should)

Total of 340 units making it the most dense development in the Leslieville Area (Showcase to have 230 if it ever sells enough to build)

On October 17th I had a conversation with the sales team and they confirmed that some units will be priced at under $500/sqft! This came as a huge surprise to us; we assumed it would be in line with other developments at $600/sqft. The Carlaw is sure to sell out very quickly as resale lofts and condos in the area are currently achieving up to $650/sqft every day! The stacked townhomes may be slightly less while the PH’s could be more. One thing we know is that Streetcar Developments has yet to disappoint us, we love their product and will do out best to support it. Below are the latest renderings.

On September 28th, 2011; the Spring Realty Team had a conversation with the Sales Team of The Carlaw which confirmed our front of the line access. We will have floor plans and prices very soon and will be able to start selling before other Brokers and the general public by the end of October. It’s best if you contact us with the Subject Line: The Carlaw and we will get right back to you with details.

Here’s how Assignment Sales work in Toronto Real Estate

You may have heard the term “Assignment” lately as it has become really popular with speculative condo investors.

Assignments are defined as follows: The Assigning or Selling of your rights to purchase a property.

To clarify, you’re not actually selling the property. Since the Assignor (Seller) hasn’t taken possession yet (usually because it’s not built or has not registered yet), they are simply assigning the rights to the Assignee (Buyer).

Here’s an example: If I walked in to a condo sales centre, signed and bought a pre construction unit from the floor plans I would have the right to purchase said unit when it was constructed and registered. An assignment is when I take that paper that I signed, my right to purchase, and sell it to someone else; The Assignee, for a certain amount. To break it down, if I agreed to buy the condo for $300,000, then found a Buyer aka Assignee, the Assignee has the right to purchase said unit for $300,000 but he/she has paid me a premium on top of the $300,000 for that right.

A client just went through one of these for a condo that he had bought pre construction. He, as usual, got in over his head with purchases and decided to assign a unit in order to free up some cash to make the deposits on another place that he had purchased pre construction. After spending some time spreading the word and marketing the property I received a call from a colleague saying he had a buyer for me and we eventually made the deal happen. Here is how I structured the deal to make it work for my client:

He had paid $356,400 for this unit (I should say, he had agreed to pay that amount when it was ready a year or so from now). He had made initial deposits of $53,750, or 15% of the purchase price. My goal was to recover as much of that now for my client. Next, the buyer aka Assignee agreed to purchase said unit from my client for $380,000. What this means is that he will eventually purchase the unit from the developer for $356,400 but give my client $23,600 for the right to do so (Total to the Buyer is $380,000).

So now the Assignee owes the initial deposit $53,750 plus the built in profit of $23,600 all totaling $77,350. Most people don’t have that kind of money lying around but since the money was needed right away we worked out a plan where he would pay the initial deposit of $53,750 now (borrowed from his parents) and the remainder of the cash from his mortgage when the condo was built and ready to register. We were lucky because the Assignee had the ability to come up with the cash.

Sometimes when the Assignee doesn’t have the option of paying out the Assignor it can be agreed that all the money will be transferred when the condo is ready and registered. An Assignor would likely agree to the latter only if the profit margins are much higher and the money is not needed right away. In this case since my client needed to be paid out now he accepted the small profit and was able to cash out and pay for his most recent purchase.

Assignments, unlike resale transactions can get quite complicated. It is very important that you have an experienced Spring Realty Broker to work out the contract and an experienced real estate Lawyer to help mitigate risk for the client. I have been involved in hundreds of assignment transactions and with the help of Feld/Kalia Team of lawyers we get the job done right. Contact Us to get started.

This prolonged period of low cost borrowing continues to have dramatic effects on Toronto real estate. Buyers are able to finance larger mortgages and home owners are taking the opportunity to renovate older, dated homes. The housing stock in many neighbourhoods is improving significantly with lots of construction activity around the city.

If you’re looking for a newly renovated home, pondering the investment benefit of renovations to your current home, or are considering changes to your mortgage contact Spring Realty today.

We’ve all been there, you’re standing waiting for the TTC bus it’s –25 you can’t feel your toes or fingers. Each passing taxi looks like salvation but you resist the urge to flag it down because you’re sure the next bus is just around the corner. Of course it’s not and you continue to wait another 10 minutes, at which point your toes have turned a deep shade of blue and another taxi starts approaching. This time your not so certain that the bus is around the corner, you try to resist but the lour of the warm taxi is too much and you flag it down. We’ll we all know what happens next, no sooner do you sit down on the cracked plastic seat of an aged Crown Vic. then do you hear that high pitched whir of an approaching bus!

Well my friends no more! With little to no fan fair and even less media coverage the TTC released it’s automated vehicle scheduling system a number of months ago, it’s called Next Vehicle Arrival System (NVAS). This fantastic little piece of technology allows the user to see exactly when the next bus is coming. Developed by the people at NextBus the system gives real time updates of all vehicles on the system. So no more guessing or trying to decipher those cryptic time tables posted by the stops (which at best are guesstimations based on a city with no cars). Simply pull out your chosen smart phone and go to www.nextBus.com from there you will be able to install a direct link that you uses the internal GPS in your phone to tell you when the next bus closest to you will arrive. Most importantly these times are not based on a set schedule but rather on live GPS information that is relayed from each bus. It is a real time, life and toe saver to be sure, to learn more and start using the NextBus system just follow the links below.

So you’ve found your dream home or it’s time to renegotiate. The big question is whether to go with a Fixed versus Variable mortgage. It really all comes down to each owners personal situation. As Spring is all about informing it’s clients we want to reference an independent study into the question:

Summary of Research Findings

Choosing a variable rate mortgage would have saved consumers $20,000 in interest payments over 15 years (based on a $100,000 mortgage)(1).

Consumers would have been better off borrowing at prime rate (variable) compared to a 5-year fixed rate 89% of the time(1).

As a Toronto home owner the most striking statistic from this study is that it’s based on a $100,000 mortgage for 15 years! With a Toronto home closing in on the $400,00 average it’s more realistic for Toronto new home buyers to look at saving $130,000 in interest over a 25 year mortgage. As home owner with a variable rate mortgage since 2007 I would certainly expect that an update of this study from 2007 to today would only reinforce that variable rates over time are proven to save money on average over the long term. There are the 10% of people who guess right and lock in rates before rate increases however this guessing game likely catches up with home owners over the long run.

The primary reason a homeowner may benefit from a fixed rate mortgage is to define the expense over the term of the mortgage. Many first time home owners run tight budgets with little room for interest rate price fluctuations. With a variable rate mortgage the risk is borne by the home owner as the bank’s cut is defined (prime minus .9 for example). With a fixed rate mortgage the bank must price the risk of interest volatility into the model leading to higher rates.

It’s important to acknowledge that when looking at historical data it’s not always a perfect predictor of future behavior. We’ve been in a state of historically low interest rates for a few years and the Fed just stated they don’t expect rates to increase until at least mid 2103. This will lower the chance of the Bank of Canada raising interest rates for the next couple years.

If it’s time to negotiate a mortgage contact Spring Realty as we can put you in contact with a Mortgage Broker who can help you get approved and fight for you to get the best rate possible.

1 – Mortgage Financing 2007: What Now? “(M.A. Milevsky and B. Walker) September 2007″. Please note that Dr. Milevsky’s full research paper is available in English only.